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Thursday, August 22, 2013

German parties scramble as third Greek bailout drops into the election campaign

The parties scramble on Greece in the election campaign

As we discussed yesterday, Germany has finally owned up to what everyone already knew – Greece needs more help. Not exactly ground breaking news some might say, but given that the German federal elections are 4 weeks away, the response in Germany has been frantic – providing a bit more insight into how each party views the eurozone crisis.

“I cannot say today what amount would possibly be needed…I cannot put forward a number, or confirm one. I don't know. One cannot know…We can only decide in the middle of next year."

“I have to say I am a little surprised. Each Member of Parliament has all materials [relating to Greece.] And that, what [German Finance Minister Wolfgang] Schäuble said yesterday about Greece, everyone already knew that.”

Since Schäuble let the cat out of the bag a few days ago, the government, (via numerous politicians and spokespeople) has been tirelessly trying to display the comments as being in line with existing party policy. It has also tried to dispel the discussion altogether, suggesting no decision will be taken until mid-2014.

SPD
As expected in an election campaign, the opposition has jumped on the slip up. In an interview with Osnabrücker Zeitung, SPD Chancellor Candidate Peer Steinbrück said:

“I say clearly that saving Europe and the cohesion of the continent will cost something, also us Germans. It is time that Mrs Merkel tells that honestly to the people.”

In an interview with Handelsblatt, SPD Chairman Sigmar Gabriel said:

“[This] is the difference between the Chancellor and the SPD. Mrs Merkel says Germany will not go into a debt-union. In reality, the Chancellor has already long-organised such debt union secretly via the ECB. Mr Draghi has taken over state financing in the crisis states. But even before the election, the bill is going to arrive, in that Greece will guaranteed apply for another debt haircut.”

Former German Chancellor Gerhard Schröder also made his first foray into the election, telling a party rally:

“It is a big lie that Germany will not have to pay for Europe.”

For all the SPD's attempts to push the CDU into admitting that the eurozone will need further aid, it still isn’t entirely clear what the SPD sees as the solution to the eurozone crisis. This has hampered its attempts to take advantage of the situation. It’s also telling that interventions by SPD party 'big beasts' seem to make Chancellor candidate Steinbrück look timid and uninspiring -- rather than helping him.

CSU
The Bavarian sister party of the CDU has been notoriously pessimistic over the eurozone crisis and is, expectedly, none too happy about the timing and the substance of the admission that Greece needs more aid.

CSU leader and President of Barvaria, Horst Seehofer said that a new aid package for Greece "is not in question," and that he is "not very happy," with the current discussion. Meanwhile, Bavarian Finance Minister Markus Soeder warned that:

“It was completely wrong to announce a third programme [for Greece] now.”

ECB
The ECB has offered veiled support to the German government. ECB Executive Board member Jörg Asmussen, who was visiting Athens yesterday, said that the plan remained to assess Greece’s situation once it registers an annual primary budget surplus -- likely at the end of this year.

Meanwhile, Bundesbank President Jens Weidmann commented that, “Nobody here [in Germany] longs for the D-Mark…We are fighting for a stable euro,” playing down fears this could revive talk of a eurozone break up.

Other parties have weighed in as well, with Alternative für Deutschland and Die Linke slamming the prospect of any further bailouts as expected. This incident could potentially help increase their share of the vote, although it may well come at the expense of the junior coalition partner, the FDP, which has been fairly quiet throughout this episode – that of course could make creating a governing coalition a bit trickier.

Despite the CDU's attempts then, this issue seems here to stay, although it is unlikely to have a significant bearing on the outcome of the election.

That said, it doesn't paint a rosy picture for the German approach to the eurozone crisis after the election. Those expecting huge change are likely to be dissapointed. Another bailout simply suggests more of the same. Meanwhile, all parties seem short of any real policies for how to change the current approach and/or find a real solution to the eurozone's economic woes.

5 comments:

Jesper
said...

I'm getting the impression that it is mostly the Anglo-Saxon press that is being corrected now.

For months and years there has been the constant message from the Anglo Saxon press that the bailouts hasn't cost Germany anything. At the same time the same Anglo Saxon press has been claiming that German press have been lying to the German people and that German people incorrectly believed that the bailouts cost the Germany a lot of money.

The Anglo Saxon press has now done a turnaround and rewriting of history that is so Orwellian that it is almost unbelievable. Facts haven't changed but opinions of some commentators have most certainly changed.

Jesper: I'm really unclear what you are going on about. Every publication I regularly read has been saying for the past five years that the only alternatives for the eurozone are to let some of the peripheral countries leave, or adopt a debt union in some form.

If you could read that and conclude that they were saying a debt union would cost Germany nothing I would really doubt your reading comprehension skills.

the turnaround here hasn't been in the Anglo-Saxon press at all. Their message has been consistent all along. If Greece is not to leave the eurozone, someone has to pay, and that someone is Greater Germany.

The only turnaround has been by German politicians, who are very belatedly starting to come clean with the German voter, and are just beginning to admit that it will cost a lot of German money to keep the eurozone together.

from one of your links:""The bailouts haven't cost German taxpayers a penny," he insisted. "The belief that this money is gone and will never come back is wrong. These are loans that must be paid back." "

Anglo Saxon press has been constantly saying that the money is only lent and will be paid back.Anglo Saxon press has been constantly saying that the German people have been tricked by their press and their leaders into believing that the money is not lent but has been given away. That the lending is profitable...

Now, the Anglo Saxon press has changed their tune (a complete turnaround of their views) into the complete opposite of the above.

Now the message in the Anglo Saxon press is that the lent money will not be paid back.Now the message in the Anglo Saxon press is that the German people have been tricked by their press and their leaders into believing that the money was only lent and would be paid back.

Did anyone believe that the divergence between the German economy and economies in the South of the Eurozone were miraculously going to happen? And that the weaker economies were suddenly going to show massive surpluses and be able to repay debt?The days of miracles are gone.